corn - All posts tagged corn

Corn prices tumbled Tuesday after federal officials projected bigger-than-expected U.S. stockpiles of the grain following last year’s record production. Corn for May delivery declined 18.2 cents, or 4.63%, to $3.76 1/4 a bushel at the Chicago Board of Trade.

In the ETF area, the Teucrium Corn exchange-trade fund (ticker: CORN) dropped more than 4.5% to close at $24.74

As the Wall Street Journal reports:

The U.S. Department of Agriculture said domestic corn stockpiles on March 1 totaled 7.745 billion bushels, surpassing analysts’ expectations for 7.628 billion bushels. That figure is up from 7.008 billion bushels on the same date last year.

Growers in 2014 harvested 14.22 billion bushels of corn, the most ever, after favorable weather conditions during the growing season boosted yields. Stiff competition from rival grains on international markets also helped push U.S. corn stockpiles higher, with crops like sorghum eating into U.S. corn sales as foreign-based livestock producers shop for the lowest-cost feed, according to John Kleist, director of research with brokerage firm EBOT Trading LLC.

Corn prices also were pressured by the USDA’s prospective planting outlook report, which predicted U.S. growers would seed more acres of the crop than analysts had expected.

The drought trade lives on. Or, at least, the wheat and corn prices that shot higher this summer have mostly stayed in a range, and that range is sharply higher than early in the year.

This week, a Friday selloff trimmed what were shaping up to be big five-day gains. Corn prices had rallied on Thursday after the U.S. Department of Agriculture warned of tighter grain supplies than market watchers had expected. But the USDA said Friday morning that net corn exports sales for the week ending Oct. 4 were just 14,200 metric tons, versus analysts’ expectation for 300,000 to 425,000 tons, reports Dow Jones Newswires’ Owen Fletcher.

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Yes, there are crop-specific funds on the market. The Teucrium Corn Fund (CORN) up by less than 1% on the week at this writing, having slumped 2.6% Friday. The Teucrium Wheat Fund (WEAT) is down slightly for the week after a 3% fall on Friday. The PowerShares DB Agriculture Fund (DBA) , a more diversified commodity ETF that’s down 0.9% on Friday, is also showing a slight loss for the week. Percentages are given on a market-price basis.

Credit Suisse’s (CS) commodity strategists said this morning that they’re not looking for grain to keep rising in the near term. “Now that harvest season has commenced, our expectation is for prices to slowly trend lower as the shock of the US drought wanes, assuming there are no further weather-related disruptions, and as higher production numbers in other regions materialize,” write Ric Deverell, Marcus Garvey and four co-authors.

The caveat to this rather sanguine outlook: The tighter U.S. supply this year pretty much guarantees that the market will be more volatile than normal in the coming months.

From CS: “Although there is more stock now globally (because of China) relative to previous years, the majority of that will unlikely be available to the rest of the world. That leaves globally available stocks at the lowest level seen during the period for which we have comparable data (since 1960) at about 27.3 days without Chinese stocks. This means that slight changes to global supply (and demand) in the coming months will have a significantly larger effect on prices than they would in a less tight market – almost ensuring significant further price volatility.”

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